Emergent Research

EMERGENT RESEARCH is focused on better understanding the small business sector of the US and global economy.

Authors

The authors are Steve King and Carolyn Ockels. Steve and Carolyn are partners at Emergent Research and Senior Fellows at the Society for New Communications Research. Carolyn is leading the coworking study and Steve is a member of the project team.

Videos

Disclosure Policy

Emergent Research works with corporate, government and non-profit clients. When we reference organizations that have provided us funding in the last year we will note it.
If we mention a product or service that we received for free or other considerations, we will note it.

Assistant Edge

August 2015

August 31, 2015

The Staffing Industry Analysts (SIA) - a leading, global analyst firm focused on the use of contingent workers by businesses - recently released a report on the human cloud.

It's only available to their members.

But since I called them a "leading, global analyst firm" and pitch them again at the end of this article, I'm hoping they'll be OK with me "borrowing" a bit from their report.

They define the human cloud as:

An emerging set of work intermediation models that enable work arrangements of various kinds to be established and completed (including payment of workers) entirely through a digital/online platform. In many cases (though not always), the platform also supports “the enactment and management” of the work (to a lesser or greater degree).

Job boards (like Monster) and social networks (like LinkedIn) do not fall within our definition of human cloud; while those two types of talent exchange platforms may support the sourcing and recruiting part of work arrangements being established, such platforms do not further enable or support work arrangements through to their completion (including payment of workers, tax filings, etc.).

SIA stresses that these categories are not mutually exclusive and many companies blend their business model and services across the categories.

SIA estimates the total revenue for the Human Cloud industry in 2014 to be between $8.9 - $11.1 billion.

This is transaction value, meaning the gross revenue generated. The companies only get to keep the net revenue. For example Uber keeps about 20% (the net revenue) of the gross revenue generated by their drivers. The drivers get the other 80%.

SIA's top 10 Human Cloud companies are (click to enlarge):

Although long and full of big words, we like the SIA's Human Cloud definition and plan on using it in our work.

For more information on this topic, visit SIA's website. They have a wide range of interesting content and much of it is free.

August 27, 2015

Pacific Standard's Who Really Runs the Airbnbs looks at the boom in Airbnb rentals in New Orleans with a focus on better understanding whether or not Airbnb hosts live in the space they rent.

In New Orleans, most don't. Key quote:

Only 34 percent of rentals are for rooms or shared rooms; 66 percent of listings are for an entire home or apartment. More than two-thirds (69 percent) are rented year round. Almost half of all hosts operate at least two rentals.

These numbers suggest that your modal Airbnb host doesn’t live in the home they rent out. Some may actually live in another city altogether. Others are using Airbnb as an investment opportunity, buying homes and turning them into full-time rentals.

The very cool chart below comes from Inside Airbnb New Orleans and shows the distribution of Airbnb rentals by type across New Orleans.

New Orleans is a major tourist city with a non-stop parade of conventions and party goers. This year round demand for accommodations makes it attractive to folks who want to rent apartments or houses full-time.

What's happening in New Orleans is indicative of a broader trend of opportunistic entrepreneurs using the Airbnb to create micro hotel chains.

As we said last year, we expect this trend to continue. Key quote from our article:

Because of their business focus, micro hotel will provide better properties and service. They will also garner more reviews and promote their sites more effectively. These factors will lead to consumers increasingly choosing micro hotels over true peer-to-peer rentals.

A similar thing happened on Ebay.

Not many remember this, but initially Ebay was positioned as a peer-to-peer commerce platform. The vision was to create a site where people could buy and sell things to other people. But it didn't take long for entrepreneurs to recognize the value of Ebay and businesses large and small quickly dominated the site.

This does not mean the death of peer-to-peer commerce (or peer-to-peer Airbnb rentals). But expect to see more and more businesses operating on Airbnb. Also expect to see more businesses on the other sharing/on-demand platforms.

August 25, 2015

The 3D printing industry is at an interesting point, with both good and bad news coming out on a regular basis.

The most recent bad news comes from the earnings (losses, actually) reported by 2 public makers of 3D printers.

As reported in the WSJ article 3D Printer Firms Fall Flat, both 3D Systems and Stratasys reported ugly earnings due to "an increasingly uncertain outlook as many potential buyers hold out for what they hope will be better, faster machines."

Another reason for the general sales slow down is the long anticipated consumer market for 3D printers has not materialized, at least yet. Key quote:

The expected household market for printers hasn’t caught on, despite widespread availability of printers at big-box retailers for under $5,000. Less than 10% of Stratasys’s annual sales come from home users, according to an analyst estimate.

But even as it slumps a bit, there's still a lot enthusiasm around the 3D printing industry and no change in the view 3D will eventually fundamentally change how things are made.

For example, Google just announced they are leading a $100 million investment round in 3D manufacturing company Carbon3D. They have an incredibly cool manufacturing process they call CLIP - Continuous Liquid Interface Production.

This is a photochemical process, rather than the layer-by-layer process of traditional 3D printers, which allows them to "grow" functional parts at 100 times the speed of existing layer printers.

If it works, it could be the technology that delivers on the mass manufacturing promise of 3D printing.

There's been little doubt for years that 3D printing is a game changing technology. The question has been when will it finally enter mainstream use for industrial applications. As we've pointed out in the past, the hype around this technology has greatly exceeded the reality.

But 3D printing is growing up and already having a big impact in certain markets. We think over the next 5-7 years the reality will catch up with the hype.

August 24, 2015

The vast majority of reactions are negative. This not surprising given how harsh the article makes Amazon sound - people crying at their desks, sick people callously culled, lots of backstabbing, etc.

The reason we care about this issue is how companies treat their workers has a major impact on the independent workforce.

This is because most people go through a "mental math" process weighing the pro and cons of self-employment versus having a traditional job.

Historically (at least from the mid-1950s), the math weighed heavily in favor of the traditional job. So much so that only those who were truly driven to entrepreneurship or to be their own boss became self-employed.

But the math has changed.

Over the past few decades traditional job benefits have been cut, job security reduced and workloads increased. And the less attractive traditional employment gets, the more attractive self-employment becomes.

Which gets me back to Amazon.

There's a growing movement among Americans to "work to live" instead of "living to work". Amazon's cut throat culture, while not common across corporate America, is becoming more common. This makes self-employment more attractive to more people.

Six million Americans ... are choosing to work part time, according to the U.S. Bureau of Labor Statistics. Typically young and college-educated, they’re not doing so because personal or economic circumstances forced them to. Rather, many are abandoning the traditional career path their parents took and working just enough hours to pay the bills or pursue a passion: toy making, puppetry, nonprofit advocacy. Their numbers have increased 12 percent since 2007, according to the BLS, a shift with broad implications for hiring practices.

Our work also reflects this. We've seen the number of full time independent workers grow from 15.9 million to almost 18 million over the past 5 years. The number of part-time independents has grown even faster.

The key reasons given by these folks for choosing to become independent workers are the flexibility, autonomy and control independent work provides. Most also want a life in addition to a job.

I'm quoted in the article and it mentions soon to be published research we've done with MBO Partners on the attributes independent consultants, freelancers and contractors look for in hiring organizations.

Analysts say a wider shift is afoot in the mind of the American consumer, spurred by the popularity of a growing body of scientific studies that appear to show that experiences, not objects, bring the most happiness ... Millennials — the 20- and 30-something consumers whom marketers covet — would rather spend their hard-won cash on out-of-town vacations, meals with friends, gym memberships and, of course, their smartphones, many surveys suggest.

But the rise of social media has led to people wanting experiences they can post about on Facebook, Instagram, Twitter and elsewhere. This is clearly helping to drive the growth in experiences. We've seen this many times in our work with the growth of food trucks being a great example.

The retail industry is fighting back by trying to provide more experiences as part of the shopping experience.

A couple of charts jumped out at me. The first is the number of active VC firms. As the study chart below shows, there's been a steady decline in the number of VC firms since the Internet bubble of the late 1990's.

Key quote from the report:

... 200 funds invested in five or more deals in 2014, 4% fewer than in 2013 and 83% fewer than in 2001.

Despite the steady decline in the number of funds, the amount of money invested in startups and the number of companies receiving venture capital has consistently increased since the early 2000s.

This is in part due to heavy spending by large VC firms on later stage firms such as Uber and Airbnb. The large funds are able to do this because they are garnering a larger share of industry assets. Key quote:

During 2014, we continued to see fundraising dominated by a handful of large funds, with Accel Partners, Andreessen Horowitz, Founders Fund, Kleiner Perkins Caufield & Byers, Lightspeed Venture Partners, Technology Crossover Ventures, Tiger Global Management and Norwest Venture Partners each raising over $1 billion. These firms represent only 4% of the total number of firms that raised capital during the year, but account for 44% of all capital raised.

The venture capital industry has been going through a lot of change over the past decade. We've reported on it's problems in the past, but as this data shows the industry is still healthy.

But the office is not merely a place for productivity; it is also a place for social contact. A defined physical space with a set of loosely connected people working toward a common goal, the office contains the most consistent set of individuals the average white-collar worker will encounter regularly outside family ... Avoiding social contact is all but impossible; making at least some friends, inevitable.

Another key quote on why working from the office is often better than from home:

The simple opportunity to run into others may be one of the most overlooked privileges of modern work life, and the one aspect of the office that work from home can rarely replicate. The water cooler chat became ubiquitous in the workplace because talk, as water, sustains life. One cannot run into colleagues on the way to one’s refrigerator.

Simply put, the office provides many people with very valuable social contact.

The article doesn't discuss weak ties - important links among people who are not closely associated - but the academic article does (warning - it's a really wonky article with lots of academic jargon - to be honest I couldn't get through it all). But the key quote is not hard to follow:

The core discussion network is not a representation of our strong ties; it is a combination of the people we are close to, people we are not close to but who are knowledgeable about the matters we regularly find important, and people we are not close to but who are available because of our routine activities.

The article and academic study help explain why coworking is so successful. Coworking spaces, in addition to providing work environments, also provide social environments and easy access to knowledgeable people.

Virtual reality, which blends the physical and digital, is also getting a lot of attention these days. The founder of virtual reality company VR company Oculus Rift, which is owned by Facebook, is even on the cover of Time Magazine.

This is leading to a spirited debate around whether this means virtual reality is about to boom or die, but while it may not boom VR is certainly going to continue to grow.

If they can deliver on their goal of using technology to blend the physical and digital and create spaces that "enable amazing things rather than just a place where you might do amazing things", success will be pretty much guaranteed.